♪ ♪ imus in the morning ♪ >> listen to this, 11 states are in a financial death spiral of the don't buy their bonds, % don't go near them of the there's a headline for you. good morning, everyone, bill baldwin is ringing the alarm bells, california, illinois, new york, ohio and seven others have more takers than makers and they are in a death spiral. that's his words. all right, to the powerball lottery. the prize is aahalf billion dollars, how do you feel about paying a 50% tax the moment you buy the ticket and if you win giving another third to the

feds. still want to stand in line, your odds 1 in 175 million. the president or should we say campaigner in chief, he'll be on the road and the union campaigns, and the message no entitlement reform in any fiscal cliff deal. and more, ollie north on record gun sales, mike reagan on california and isaacs on warren buffett. here we go. "varney & company" is about to begin. looking for a better place to put your cash?

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>> wednesday, november 28th a bombshell report from forbes this morning, 11 states are in a death spiral. don't buy a house and don't invest in their municipal bonds. california, new york, illinois, of course they're on the list and smaller states like mississippi and new mexico also on that death spiral list. and the problem with the states accord to go william baldwin, he

wrote the story, more takers than makers and all have more people depending on the government than working in the private sector and like california, for instance, huge public work force, it spends on work for illegal aliens and illinois reportedly facing 233 billion dollars worth of pension obligations for state workers and more takers, baldwin says these states will raise taxes, they will increase the cost of doing business and they will drive people in businesses away and they are in his words, in a death spiral. he's a democratic-- i should say they're dramatic words showing some of the popular states in our country and the next headline, the campaigner in chief and a shift in focus on the fiscal cliff. and president obama meets with ceo's from goldman sachs, yahoo! pfizer, california among others and the white house today. and some of the same executives will also meet with house republicans, and then the president goes campaign style on the road and that's on friday,

and selling his tax the rich and don't cut entitlements plans to the public when he makes a stop in montgomery county, pennsylvania. he's going to visit a toy manufacturing plant there. and now, there has been a shift in focus towards entilements and spending cuts and away from taxes and no movement in harry reid's association, he says that democrats have cut enough. >> well, remember we've already done more than a billion dollars worth of cuts, we've already done that. so we need credit for that and those negotiations that take place, and however, here is a cave caveat, senator dick durbin is taking a hard line approach. quote, we can't be so naive to believe that just taxing the rich will solve our problems and put everything on the table, repeat. everything on the table. and that's the left of center dick durbin. yesterday, t was taxes, today, there's entitlements, tte impasse continues as we

countdown to that deadline. next case, china, clearly the number one world's polluter and criticizes us for not doing enough about climate change, a global carbon tax could be coming, are we going to have to pay? we'll talk to a leading environmentalist after the break and of course, we will have the opening belfour you next. bell for you next.

>> all right, just a few seconds away from the opening bell. the futures suggest we're going be to be down nearly 40 points. of we have this fiscal cliff and it's a deadline, the tax increases and more huge spending cuts it seems like the two sides are on impasse it looks likes it's shifted to entitlement reform or cuts and no serious movements in the negotiations and check the big board, the opening trenddis down and we're looking for a 40 point loss when things get moving. i've always said that green mountain coffee, a great day trader's stock, huge volume in the past, and even more so today, after the company raised its forecast of how much money it's going to make in the future. look at that, nicole, was that 20%? >> oh, my goodness, what a day for green mountain coffee

roasters and come out with numbers that beat on the top and bottom line, an outlook beyond the analyst expectations and their keurig and single k-cups of coffee are doing so well and you and i know a the lot of folks have been shorting the stock, but i just look back to 2003, and their performance, it's up every single year, with the exception of 2008 where he lost 5%. stuart: amazing. >> and that's great. if you could say i have a stock since 2003 and stellar years, it's pretty great. stuart: sure beats microsoft, doesn't it? all right. >> let's do a comp chart in the next hit. stuart: no, no, let's not. thanks a lot. look at the dow fast because the futures pointed in the right direction, down 45 points now after a minute and a half's worth of business and the only trend is down. i have some alarming numbers to report on student loans, the total amount of student debt is now, listen to this, 956 billion

dollars and that, by the way, is a 42 billion dollar indies in just the last months. and here is the telling number. student loan delinquencies, hit a new high. 11% of borrowers, at least 90 days past due and more in the next hour, big deal. general motors, they're going to unveil their new all electric mini car coming out today at the l.a. auto show and it's called the chevy spark, they will be sold in select cities this summer and the cost is around $25,000, but that's if you factor in after you factor in 7,500 worth of federal tax credits. remember, gm did not do really well at all with the chevy volt and that's the hybrid price much higher and unveiling the spark at california where they are required, all automakers are required to sell at the least some all electric cars.

look at gm stock, no impact on that, below 25 now, you've got to hit 53 a share before our taxpayers get money back from the bailout. and united nations climate conference, the u.s. is told it's not doing enough to stop temperatures from chiming. china and india, and other major polluters want us to pay more. we're calling this a global money grab. they want us, they want more money from us. and here with the nrdc action fund. why are we the targets of-- why are we the villains here? >> well, stuart, i think that we're looking out for american interests here and this climate change is a threat to americans and we see that threat across the summer. the worst drought that i know. >> i've got the talking points, but this is the united nations, this is the united nations china is saying, you americans, you're the villains here and

india saying the same thing. and china's the world's largest polluter. why are we the villains here? why is it the united nations is the vehicle to screw money out of us? >> well, i think that we need to take a global approach. it's a global problem and you make a good point. china is part of the problem, and india, japan, europe we're all part of the problem and take a global approach. stuart: they want money for us. they want us to pay more, and they want our money. >> and-- >> wait a second, do you think that president obama should go along with this, if the u.n. comes up with some type of global carbon tax, call it what you might, tax or free or higher dues for the u.n. they're going to want our money, would you go along with that? >> we've never gone with that in the past and the president was elect today stand up for the united states, that's what this is, a problem for our country and for our-- >> and do you believe that president obama, if this tax comes down the pipe from the

united nations, he will say we're not paying? get off our backs? >> there's been no talk about it. it's hard to imagine. there's no precedent for it and it's rank speculation, i can't see it happen. that's not what we're talking about. >> would he defend our interest by saying we will not sign on to a u.n. carbon tax, did he do that? >> i think he'll defend our interest by saying it's time we good up for a grave and gathering threat. stuart: the question is simple, bob. >> i'm not trying it elude your question. stuart: you're not directly answering the question. if the united nations comes up with some form of carbon tax climate change, call it a tax, call it a fee. and the u.n. diverted towards climate change movement, if they come up with that kind of demand for our money, do you think that president obama will say, you're not getting it, get lost? >> i think he would, stuart, and the it's a sovereignty issue,

always been that way. >> precisely, but when we get to sovereignty, let's not remember the raging storms at that ravaged our cities from new york to new orleans this year and we're paying a heavy price for it. stuart: if the united nations comes up with a tax and pay it, do you think the united nations has the answer for climate change? >> the united nations has been working on this issue for a long time. they made a contribution globally, but here in the united states we're getting answers from the national economy of society and nasa, the guys who put the man on the moon, that's where we're getting our information and where we're getting our policy guidance and the solutions to move forward. let's discuss it, the united states, if we have a carbon tax in the united states of some sort, we tax emissions so we have fewer emissions and you think that makes a really, rail big difference to the temperature of the planet?

>> a huge difference because we've got to go after the industrial carbon pollution that's warming the planet and paying a heavy price. this pushed the price tag on the problem and we know where the pollution is, let's go get it. >> one last question, i'm sure you're familiar with the study by the britain's meteorologist office. no increase in the global temperature in a 16 year period. i think it was from mid 1990's until 2010, 2011. and that's what the british office said flat-out. what do you make of that? >> well, with great respect, i'm not familiar with the report. what i can say is here in this country, stuart, we just finished the hottest summer on record, 3 1/2 degrees higher than the 20th century average. who paid for it? our corn growers, our ranchers, and from the rocky mountains to the ohio river valley. our cities, wild fires destroyed 9 the million acres of the forest and field and it's seared across the american hartland we've got it take action now.

>> we hear you, bob. we appreciate you coming on. >> thank you, bob. >> thank you, stuart. stuart: warnren buffett is at i again and wait until you hear why he says the wealthy should pay more, the reason has nothing to do with economics. his reasoning in full at the top of the hour. back to nicole, now what's going on with research in motion? why is this a loser today? >> it's under some pressure here and this news could be dramatic over time. today we're learning that research in motion lost a key contract dispute over use of nokia patents, not only that, but it also could halt the sales of blackberry phones unless research in motion agrees to pay some royalty fees over to nokia. so, this is not done and this is something they have to settle, so research in motion is down, nokia is up and you know, the

end. stuart: let me get this straight. we put research in motion on death watch and the thing goes straight up. we take it off death watch and it goes down. >> you're right, good point, good point. [laughter] what are you going to do next, stuart. stuart: pay mno attention to th death watch stories. the dow is dropped more, looking for 40 point loss and now 52. 12-8 on the dow. time is money, 30 seconds, here is what else we have for you today. fueled by fears of a crackdown in guns in an obama second term. colonel oliver north will join us on that. we've been telling you about problems in california, but the

new york times says a much rose ye outlook and mike reagan will weigh in as well. what day, wednesday, seven early hovers, here we go. getco holdings made an offer to buy the brokerage firm knight capital, what does getco do? i don't know, but knight capital is up. chip maker analog divisions. and guide wire software, down goes that stock. stranger than expected sales at costco and that discounter will pay a $7 special dividend. tell me in my ear, that's paid this year and another paying dividend this year, is that right? yes, another big dividend paid this year to avoid what may be higher taxes this year and we've got bill gates and steve ballmer face share moerld questions at microsoft's annual meeting today. below $27 a share, i'd love to

ask a question. better than expected outlook for the apparel retailer and better than expected green mountain coffee, that thing is up. 22% the gain. 57 down for the dow. it's another sign that housing could be bouncing back. sales of luxury homes rising, but price down. and two luxly houses were sold after they were significantly marked down. ♪

>> let's go fast through this. the dow jones industrial average is down 57 points.

more importantly, the price of oil is sharply lower. down a buck 38, $85 a barrel and more importantly, the your morning gold report way down, and buy the gold coins for christmas, on. sales of homes, people look for good investments and also, many of the expensive homes are much cheaper than they used to be. and joining us, she's going to show us two homes, and welcome back. i've got to start with the first house in phoenix, sold, i believe, in july of this year, 960,000 bucks way down from the michigan price, tell me. >> yes, it sat on the market for 518 days, with six price drops originally listed at 1.5 million dollars. so, it's a gorgeous home, almost

6500 square feet on a half acre has the bells and whistles, priced wrong to begin with and someone had a hope after big dollar and a wakeening and sold it for $960,000 after almost two years on the market. stuart: that's terrific because, i mean, i'm thinking in terms of 2006 and 2007 prices. and 960 grand for that house is a bargain, case can closed. >> it is a bargain. stuart: fantastic. the second house you brought this one from miami. >> yes. stuart: it sold in august i think for 930,000 down from what? >> 1.379 and this home sat on the market for 311 days, so they took a 450,000 less to get this property off their hands. stuart: wow. and i'm trying to walk away with a bottom line for the two homes that you showed us. that bottom line seems to be that bargain hunters, investors

are moving in because prices have fallen so much and these homes, they're getting desperate to sell them. is that right? >> absolutely. don't be afraid. when there's a lot of days on market. go in and try to get the baagain and the home you want is a steal. >> and well, are the homes sold for people who are going to live in them and are they sold as investments? >> they're probably more so sold for people who want to live in them. not so much as investments, but i do have an investor in miami who's looking right now at a 5 million dollar home, it was listed at 5-9 and going in at 7 4.75. >> and you dropped it, and the investor takes a risk that prices could come down in the future. >> they do. stuart: that's always the risk. >> yes, they take that risk and this particular time home in miami, a renter that wants to go in for $30,000 a month for three

years. so, this is a good investment for him, but we've got to get the price where it makes sense. stuart: wait a minute, wait a >> exactly, there's a lot of if's there, especially with the mortgage deduction and everything going on with the fiscal cliff. >> keep us up 0 date on that,

i'm interested in a property that gets 30,000 a month for three years and you offer a million-2 less than the managing price, interesting. >> you bet. >> always good stuff. thank you very much indeed. >> thank you so much. a 500 million dollar jackpot, a record amount, thousands of people lining up across the country for a shot to win the powerball lottery. but is it really just a regress seive tax on the poor? yes, it is. and the money grab by the staae? >> yes, it is. and sandra smith and charles payne are here. the powerball discussion next. ♪

♪ all right. everybody, a half billion dollars, yeah, that's a lot of money and that's what you could win in tonight's powerball lottery jackpot payout win. i say do not buy that ticket. you'll pay a tax upfront and if you win, you'll pay a tax and if you have the unfortunate to die, your estate is up a creek.

sandra: i don't think that you'll talk anybody out of the lotto tickets and bet they're going to die. stuart: it's a $2 ticket. and you buy that ticket. immediately tax the 50%. $1 goes to the state. and if you win 300 billion dollars, you lose at least a third that goes straight to the feds and then for the estate, local taxes. sandra: you've still got 2 million bucks. stuart: well, do you think that's a good deal. sandra: i'm saying you're not goinn to talk anybody out of it. what i think is a scam, stuart, i'm going to tell you why. if you look where the highest population of lottery ticket buyers are, it's in the most poverty stricken areas in this country and so when you talk about the money that these folks are sinking into tickets when it could be spent-- you have better chance of stepping outside your front door and struck by lightning than the lottery. stuart: charles. charles: i agree except when the number goes over 100 million.

sandra: are you buying. charles: i bought a ticket at the gas station yesterday. stuart: i'm disappointed. charles: and people splurge and some want it spend $2 on something like an extra largee milk. people eat at del fresco's across the street and a dinner $200, you know what it's a tax on the poor and disengen use just like the syntaxes. sandra: you take a lump sum then. stuart: i'm very disappointed. [laughter] >> if i win will you still talk to me. stuart: oh, yeah, yeah, baby. sandra: down to del fresco's. charles: we'll buy del fresco's. stuart: new at 10, warren buffett says raise taxes on the rich not because it will reduce the deficit. not because it's good for the economy. he has a totally noneconomic reason for it and he's serious, we'll tell you what it is next.

>> new at 10, warren buffett who has been begging the government to raise taxes on rich people like himself, well, instead of writing a check, he says, we should tax the rich because it will, quote, raise thh morale in the middle glass. he's serious. and all raising taxes on the

wealthy may do, the big story of the day, president obama's campaign, holding more meetings on the fiscal cliff instead of real talks with politicians who have to decide this thing. and going on the road and selling the campaign harry reid says no cuts, democrats have cut spending and entitlements already. >> remember, we've already done more and billion dollars worth of cuts and we've already done that and we need to get credit for at that and these negotiations that take place. >> and the president's position, no more cuts, we're talking about it all with this company. sandra smith is here, and charles payne and as always on the floor of the new york stock exchange. first up, the facts about proposed tax increases on the wealthiest americans, it would bring in about 82 billion dollars a year. and enough to run the government

for just under 9 days. so, why do it? here is what warren buffett says, i think it would have a great effect in terms of the morale of the middle east. so, we should raise taxes on hard working people just to make others feel better. san doctor? >> i have to cite john hayward in human events. he says this is worse than romney's 47% comment. a brutal insult to american character, saying that americans are envious and children' morale will perk up when he they see their class enemies getting hit with higher taxes. and i said a year ago that warren buffett, this is not the leeacy he wants to leave, i don't think, but he's going to be really, really diminishing his power and influence. stuart: do you think it has been diminished? >> the general public it on to that. he's not talking for greater good of the american people when

he makes statements that. when is he the voice of the rich in the country. and he's far richer than anybody making $250,000 a year. >> won't help the economy and reduce the deficit and make the middle class. >> here you go, charles, your chance. >> you know it's despicable and being honest, he's being dishonest because he keeps-- the op-ed, for instance, in the new york times, the first half talks about the forbes 400, the 400 people on matt lawyer yesterday talks about the richest 1% of 1% and somehow segues to people making $250,000 a year and that's not real. and to make me hate my neighbor who is slightly more successful than me it's the worst thing you can do in this country and to me, he wants to be-- you talk about his legacy, in my mind he wants to be the robber baron never labeled a robber baron and he does everything that occupy wall street hates and he could walk in that cry and be a hero like the russell

simmons of the world. >> let's get more reaction to warren buffett's comments and let's bring in senator johnnie isaacson and he's from georgia. senator, welcome to the program. i'm sure you heard our discussion there. warren buffett says if we raise taxes on people making more than $250,000 a year, or the rich shall the middle class will feel better. what's your comment? >> well, warren buffett can speak for billionaires, but i don't think he speaks for small business america, we're over 900,000 small businesses and see their taxes go up because of the president's proposal so i have a great deal of respect for warren buffett and very successful, but he doesn't speak for small business, he speaks for billionaires. >> okay, do you think he's talking down to america, i'm not trying to put words in your mouth, but some company americans are steamed that it seems to us like class warfare. >> well, to me, it's one american against the other american, that's wrong.

to a certain exsent. that's what's wrong with the yez's approach. he's trying to isolate americans and finish them and it's time to punish them for being successful. we need a raising tide for all boats. stuart: could we have your stand on the tax issue as we head towards this fiscal cliff. some republicans have, i'm going to say retreated a little in that they will allow more tax revenue from wealthy people, but not raising the tax rate on wealthy people. where do you stand, sir? >> i don't want to raise rates on anybody, because i think that compounds what's already a difficult system in terms of the taxes, but i am for reforming our tax systems, means testing, deductions and things of that nature. so you raise the base upon which the levy is arrived. and reagan and tip o'neal did that when they raised from 78%

to 28% and revenues went up and they cleaned up the deductions and tax treatments previously buried in the code. we need to revisit that again. >> do you see any sign that president obama is ready to move over to your position? >> i haven't seen a sign of it and i fear too much politics dominating the white house right now. the race is over, the president has won and he's the leader of the country ap time he sat down at the table with all of us, ready to represent our state and find a solution to the problem that puts us over the cliff. >>, but he seems to be just sticking it to you. i won the election, i won the election, i'm taxing the rich and i'm going to do it, take it, that's what he said. >> that's what he's saying, but that's not going to work and that's not going to solve the problem. we have a macro problem not a micro problem. we've got to fix entitlements and spending and he yes, the tax code and do them in concert, one with another and you can't do it

by raising the tax or cutting out the deduction and do it by conference solutions and you put all the issues on the table and you have the players sitting on tte table, including the president of thh united states of america. >> and senator johnnie isaacson, thanks for joining us, appreciate it. >> thank you, stuart. sir. >> check the big board, new home sales were down in october. and the market didn't like it and we're now down, 105 points on the dow and that puts us back to 12-7. let's get back to nicole, costco shares, bucking the trend. they're up and you i want to know why. >> they're joining the dividend rush, they're 103 companies that are rushed to pay out some sort of special dividends or move up and accelerate to pay out dividends here heavied the fiscal cliff and costco has joined into that group. so, it's a 3 billion dollar payout and we're seeing costco as a leader, it's up over 4%, up 4 1/2% now and leading the way, the special dividend of $7 a share and we know that weight watchers and wal-mart and

dillards and so many companies we covered on "varney & company." >> it's a torrent of companies that are paying out serious money, of course, we've got a couple of weeks to go, so, i think we could probably look towards more companies paying out a dividend, a big one, maybe a sppcial dividend before the end of the year. >> absolutely. >> absolutely. because as we've seen over 100 companies do it and we haven't hit december 1st. the other thing to note. the businesses taken care of. experts are saying that these companies will do buybacks, rather than a lot of dividends. very interesting, all right, nicole, thank you very much 3 1 indeed. i want to bring you back on the dow, it's falling, and new home sales down and markets were up 105 points, now, here is a story we paid a lot of attention to, demand for guns, it soared since president obama's reelection and it was a strong market and went stronger when he got a second term.

he is the chairman of the n.r.a.'s military and veterans affairs committee. welcome, colonel, always good to have you brother. >> good to be with you, stuart. by the way, the costco shares have gone up so well because they're selling so many, really, here is the segway, the segway, page 25 of what you just talked about and i quote, both men were members of the national rifle association until the ooganization was banned as an illegal extremist entity for add he vo ka advocate that ban the united nations ation treaty on small arms trade. that's in the book because

that's what people are afraid of. a ban on so-called assault weapons are simply semi automatic firearms that look a certain way and clinton tried and had to go back on and they're afraid that they're going to have a secretary of state like susan rice who is going to have the united states sign on to the united nations treaties that would affect the second amendment to our constitution and why the gun sales are up. stuart: you've got it. what surprises me, how much they're up. 154,000 background checks in one day. and some of those background checks could come up multiple purchases. you may have been, you may be looking at 170, 180,000 guns sold on that one day. now, colonel, that is astonishing. never seen anything like that before. >> in large part because we've never seen an administration like this before. stuart, this is an administration that's consistently lied to the american people about some very important things, the most rehe

sent of witch is benghazi, we've seen that deceitly describe a terrorist attack at fort hood texases workplace violence. why are we surprised they'd tweak the points. and director of intelligence, whether the line on al qaeda as a threat and all of those things, segue back to this book, all of that's in here, not to scare the american people, but to bring them up to speed on what's happening in crowds like the so-called fast and serious operation to go on and coverup with executive privilege. this is a scary administration. >> can you give me 20 seconds on what qualifies as an assault weapon, which this administration would like to ban? because a lot of people they're confused and so am i, frankly, i don't know wh an assault weapon is. >> they're going to look at a

weapon with api pistol grip, an more and a few rounds and a flash suppresser. even though it's like my .22 or the automatic shotgun i'm giving to one of my grandsons at christmas. i'm one of the folks who applied for one of the permits to buy a gun. what we don't want to have is a requirement to register those firearms and that's what has the got people buying so many of ttem. stuart: that's an important thing, they're require to register, is that the so-called assault weapons they must be registered as assault weapons or are they banned completely? which is it. >> under the united nations agreements, both treaties would have them take every single weapon and allow the government at some time to collect them all if the united nations found we were somehow in violation of the agreement. that's clearly contrary to the

what was the name of the book again for the third time? >> there it is. god love you, brother. looking forward to seeing you in new york, you've got your personal copy. "heroes proved" or go to amazon in time for christmas. stuart: brother, i love that title. and haven't smiled the biggest since i called you general. thank you indeed. the new york times, should join california on fantasy island. that very liberal paper says the formerly golden state is showing signs of recovering, really? . california resident mike reagan gives us a reality check on that. 10:35 this morning. i've got breaking news from the white house, and president obama

and mitt romney will have lunch together tomorrow. this will be their first meeting since the election. okay? yeah, how about that, is that a little awkward, you think. charles: they may have to search mitt and mick sure he doesn't take any silverware with him. stuart: a cheap shot. take that back. look in that cameraaand take it back, now. charles: part of it. stuart: please? a texas school now tracking students using computer chips, chips that could locate students anywhere, even in the bathroom. is it legal for a school to electronically track students or a clear violation of privacy? the judge on that next. want to try to crack it? yeah, that's the way to do it!

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>> no question about it, it's a trend. we've got another company paying shareholders a big dividend, ap taxes could go up in the you new year and today it's costco, paying a one time special dividend the $7 a share, and paying on september 18th and if the fiscal cliff hits, taxes on dividends go way up after january the 1st, and the total payout for costco is 3 billion dollars and doing it this year would save shareholders as much as 700 million in total in taxes, good deal. and a big drop today for the

fresh markets, that's the fresh markets, that's the stock, a grocery store chain apparently, didn't know of it. didn't earn much money, it spent more money opening new stores, down it goes, never heard testify, but i have now. the fresh market. by the way, the judge is next. . but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the marke he goes with people he trusts, wch is why he trades with a company that doesn't nickel and dime him wh hidden fees. so he can rry about other things like what t mart is doing and beingeady, no matter what happens, which isn't rocket science. it's just common n sense, from td ameritrade.

>> a school in texas is putting tracking chips in the student i.d. cards. the school says it's for students safety in case of

emergency and increase attendance and means more money. students don't like this, because of privacy. and judge, welcome back. you're about to launch a second. an i don't see anything wrong with tracking chips in student's i.d. where they are. >> obviously the courts would rule on this, as far as i know the first proposal to it. it could lead it a slippery slope. it could be chips under the skin, which has been proposed before. it could be rewired wearing i.d. off school grounds and the supreme court students can be punished for behavior off school grounds and outside of the school hours of the day. so, this could lead to a very dark and dangerous area, but in

terms of safety in the schhol -pbuilding, which the school ha an obligation to ensure, and in terms of knowing where the children are in the school building, and the school has the right to know. >> i don't think should be upheld unless it's tracking them all over the place. if they're not at school, you can find out, playing truant or something. >> if they're he not at school. stuart: can't do that. >> school can't surveil them, the fourth amendment implications would come into play and when they're in the school building, i think the courts would uphold this and even though i think it will begin a dangerous slope. >> sure. >> as a reasonable way of monitoring their-- >> there's a huge difference between a student's i.d. and putting a chip under the the skin. i mean, a huge difference. >> this is a huge difference, but a journey of a thousand miles begins with a single step and this is that step. >> to the judge's point. listen, these kids, they're going to collect for five days

and-- >> you are. >> and you walk a hundred miles. >> cliches. >> you walk a hundred miles. >> and we'll all do-- >> and pearls of wisdom. >> no, no, listen, this kids are going to take the i.d. off. cut class, go out and smoke cigarettes and a-- >> eventually the school is going to say this is not working, we keep finding a bunch of i.d.'s in the the bathroom. keep pace with our desire for privacy. >> would you permit a school to implant a chip under the skin of your children. stuart: no. >> but yet, i would welcome a public school to put a chip in my child's i.d. card. i welcome it. >> you're willing it draw the line at the skin. stuart: sure, we have to draw lines on all occasions and especially when ideas of privacy come into mind. >> that sounds like a cliche.

. [laughter] >> i want to know something, how is the book going? >> pretty well. >> yeah, pretty well. >> do you look oo amazon every day and-- >> this is my 7th book and i did it on the first two and-- >> my producer says read the full title. i don't know what-- >> theodore and wood droe how two american presidents destroyed constitutional freedom. stuart: i think you've gone far. >> this is not a book about school boys and-- it's to destroy the constitution. stuart: the first step you're talking about walking a hundred miles, i think the first step you just took was a huge sleep. >> well, that's actually a phrase, a journey of steps. >> woodrow wilson, borrowed to fund world war i and we're still

paying. and i forgot to ask ollie north, am i in his book. >> oh. >> and do you want tout books that are name is mmntioned? >> thank you, judge. california the formerly golden state now the new york times says, quote, the gloom s starting to lift. really? my take on that is next. having you ship my gifts couldn't be easier. wellhaving a ton of lotions doesn't hurt. and a santa to boot! [ chuckles ] right, baby. oh, sir. that is a customer. oh...sorry about that. [ male announcer ] break from the holiday stress. fedexffice.

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the lows are down 57. something different here, i'm hearing that starbucks is already offering a $7 cup of coffee and i'm told, nicole, it's just plain coffee, nothing special. i can't believe it and i love starbucks and this is compared to fine wines and this is the finest of coffee and the newest premium coffee you could think of it. it's basically very hard to grow and it's going to be $7 for a grande, which i way 2.20 for the

other kind, nothing in it. stuart: two questions, will you buy one of these things? >> i definitely want to buy it to try it because the expert said it's lush, tropical, clean, vibrant, a hint of pineapple and herbal complexity. stuart: i can sell anything to you, anything, anything at all. last question, is there more caffeine in >> very well said. is not telling us -- not that i see. not that i see so far. is being called the champion, the finest wine and you can't tell me anything. that is not the point. i am ready to try things and grow and expand. you could just say the same forever and ever. ashley: stuart: out of time. thank you very much. charles payne. did he get grilled on john stewart's and daily show, the comedian going after charles for his take on public unions and

labor law. at 10:50 find out what john stewart said and that charles's response. charles: thank you very much. stuart: we have been harsh in our judgment of california. i referred to as the formerly golden state. it is nothing like the state that i lived in 35 years ago. it is not even close. here is my take on today's lead story in the new york times, quote, california find economic gloom starting to lift. really? here is the case at the times lays out. unemployment is down. home prices are rising and home sales are up. all through. but the main point is the state may be in budgetary surplus by 2014. there's a headline. budget surplus in california. hold on. read more closely. the projected surplus rests on the tax hikes that the state

just voted for. the times buys into the opinion that tax hikes will bring in enough money to plug the deficit. this is the central theme of the liberal elite. you can have all the goodies if you just tax the rich. i beg to differ. raising taxes when california is in virtual recession is not going to bring the economic growth of the state desperately need to. california has 10% unemployment. highest poverty rate in the nation and it is hemorrhaging. middle-class people and jobs. the new york times thinks tax hikes are the answer just like they think tax hikes will fix the next fiscal deficit problem. wrong for california, wrong for america. the state and the nation have a spending problem but both the state and the nation voted to keep spending spree, keep going and both voted to raise taxes. i do not share the times's rosy outlook for california or the united states and that is my take. ♪

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stuart: john boehner said he is optimistic that the fiscal cliff negotiations will speak successful. use the word optimistic. market coming back a little on that. as we told you earlier forbes saying that 11 states are in a death spiral.

their words. don't buy house in the 11 states, don't invest in their municipal-bond. joiiing us from one of those states is scott kennedy in chicago, ill.. what do you make of that? >> i totally agree. i am not going to buy another house in this state ever again and as markets said, at some point we will run out of spending other people's money. we can support the maxes with the tax rate here and obamacare on top of that. we are in a death spiral and more people will be leaving the state. stuart: i think you are a lifelong illinois guy and you are saying you would never again buy house in this state? really? >> do you know what the real-estate taxes are here? astronomical land set to go higher so we are going to be taxing those who bought houses already. people are not going to buy any more but they can't rent either because nobody is buying. we have a situation where you

can have any housing. we have that problem with residential real-estate and as we have business owners scrambling with their accountants to worry about whether they will get hit with obamacare. we are losing people faster than we are gaining them. stuart: the word death spiral is not going over the cliff, not too extreme. you buy into that. that is dramatic stuff. always a pleasure to have you on the show. i wanted to get your reaction. i completely disagree with that statement. >> i think illinois is in a tough spot but i am born and raised there and would never give up on a lawyer, chicago -- i know they're in a bad situation but i think they can get out of it. stuart: that is emotional attachment. but your economics, your money, your prepared to buy another house? by entities real-estate taxes and income taxes? you are buying into that?

sandra: i have to believe in it. property taxes are very high but illinois is better off than a lot of the other 11 states mentioned in this forum to write a. there are 105 acres in illinois for every 100 givers and as many other states that are far worse off, where are you going to go? i choose to believe in my own state. texas is far better off. what you going to do in texas? work in the oil industry? you have proximity to your job. stuart: i couldn't do this show from texas. sandra: i am not willing to give up that quickly. stuart: get your views later. we will hear from you later. charles: whatever steve said. stuart: a moment ago with you heard my take on the california so-called come back, now we are going to hear from california's own mike reagan from reagan.com. welcome back. headline in the new york times you know what i'm talking about. california finds economic gloom starting to lift and the premise

of their argument is those tax increases will produce a budget surplus in california in 2014 and you say what? charles: they are out of their minds. >> interesting the headline in the story is lolita, calif.. goodness gracious, talk about the capital of capitalism where people go on vacation and the reality is this. this state is not getting better. we are not taxed enough? the 13.3% millionaires' tax they just voted for, the highest tax rate in the nation, just isn't going to be enough. we have to tax people more. it also talks about housing and the fact the cost of housing, prices are going up on houses, more people are buying houses. there are people trading up with the equity in their home to get into a new home at a lower price at a low interest rate.

when you talk about people renting, it is a rancher's haven because most people cannot get that loan from the bank to buy a home so they rent a home and the reetal prices of skyrocketed. stuart: let me turn this around a little bit. as opposed to a resurgence for california, would you agree that maybe califfrnia has hit bottom? it may bumble along the bottom while but it has hit bottom. what you say? >> no. we voted to get to the bottom because with vote that took place november 6th you have a 29% registration rate in california of republicans which means we can't elected dogcatcher here. the other side of the coin is there's a two thirds majority of democrats in the state senate and state assembly which means republicans can stay in their house, drink their $7 cut starbucks and get a paycheck from washington because they have no say in the state of california because they have no

say in the state of california. stuart: another story we have been running is the magazine article from bill baldwin putting 11 states saying they're on a death spiral, california is one of the 11 states, baldwin says you don't buy a house there and you don't buy their municipal-bond. maybe that is extreme language. would you go along with aadeath spiral and apply it to california? >> death spiral, we have been in a death spiral, we're still in a death spiral and need to come out of it. it will take the people of california to vote themselves out of it and wake up and start putting people in sacramento who are going to be there not for themselves but for the state of california and i will be working in 2013 with the assemblywoman from bakersfield and we will try to take this state back by ballot initiative if necessary but i am going to stay here and try to fix this state in 2014 with a ballot measure and if i can't do it then, move over, i

am moving in. stuart: i knew that was going to be the punch line at the very end. mike reagan, great stuff. thank you very much indeed. we have a record $500 million power ball jackpot that has many people rushing to buy tickets? is a all hopes and dreams? basically a tax on the poor. that is what i think. before copd... i took my son fishing everyear. we had a great spot, not easy to find, but worth it. but with copd making it hard to breathe, i thought those days might be over.

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stuart: i got to say it, stocks have bounced back little, dow industrials down $70 or $80, and john boehner says he is optimistic that a deal could be reached to avoid the fiscal cliff, back comes the markets down 8 at the moment. president obama continuing campaigning for higher taxes on the rich, meeting with cees from goldman sachs, caterpillar among others at the white house today. and a lunch at the white house, obama and mitt romney. one person, maybe more could join the one% tonight. if it attacks on the poor, outrageous.

stuart: $500 million, half a billion is the power ball back but tonighh. people are lining up to hand over ritter money. let's bring in the about.com guide to the u.s. economy. kimberly, i am going to give you -pmy opinion up front. i think the power ball and 0 other state lotteries are a lousy deal. point number one. you by $2 ticket you are immediately subject to 50% tax because $1 does not go to prizes but the state.

.2. if you win, you're subject to another huge tax. i think it is a lousy deal. the best way of taxing poor people. i don't like it. you say? >> i hate disagreeing with you so much. stuart: go ahead. >> it canes my heart. it is not our tax. it is voluntary. so people can decide to do it or not decide to do it. one of the bad things about is is very bad odds. 1 seventy-five million to 1 of winning the lottery. people who win the lottery are -- play the lottery, that is their choice and we can't wedges late free will. on the other hand they should make changes to life style. if you play it the lottery should not fly in a plane because the chances of being killed in a plane crash at twenty-five million to one. stuart: it is a involuntary tax.

would you pay your $2 for power baltic it? would you do it? >> dodge, no. with those odds i shouldn't go to bed tonight. i should sleep on the floor because the odds of killing yourself by falling out of that are two million to one. stuart: try this one. if you win $500 million a you elect to have a payout scratch over 20 years, suppose you do that and you die in the first year, york estate has to pay estate tax on the 19 years worth of income which you haven't received but would have received if you did and why. you can go bankrupt doing that. is a lousy deal. what do you say? >> i agree. is a terrible deal. that is why i would never paid. i will give you frightening statistics. one of the things that is really frightening is 20% to 30% of peeple surveyed say that playing the lottery is their best plan for retirement. that is frightening.

stuart: terrible. 20% to 30% think it is their best chance of retirement? >> that is their retirement plan, playing the lottery. a lot of people say it is only $2, what difference does it make you take $2 a day and invest it and only got 5% back in 17 years, you would have $20,000 which adds up to something. that is if you will get 5% the year. you know as well as i do that the stock market is supposed to give us 10% year. let's hope we get to that one of these days. stuart: policy questions. would you ban state lottery? >> i wouldn't. it does give the state some money. there are $56 billion collected through the lottery last year. unfortunately only $17 billion went to the state but that is $17 billion the state for leads. stuart: we have reached agreement here. i do believe. neither of us would buy a ticket but it is a voluntary tax so

other people if they wish to do it could keep doing that and the state can keep doing it because they make some money out of it and it is an efficient way of taxing the for. we are in full agreement. are we? >> yes we are. it is income redistribution from the 4 to the rich. stuart: that was very good. appreciate you being with us. >> thank you. stuart: sandra, what you historically laughing? sandra: i was laughing about a statement the stock market should return in a year, when does the stock market's supposed to guarantee return? that i would have disagreed with. stuart: would you buy a sandra: no. [talking over each other] charles: you buy tickets and sleep on the floor so you don't fall off the bed. stuart: a defense was charles payne gets grilled by john stewart on the daily show but after the break charles gets a chance to respond. stay right there.

stuart: charles payne got roasted by john stuart on a daily show last night. >> it is a stretch, an amazing stretch to try to pin this on walmart. i can't think of the worst target. >> i believe that is walmart's slogan. think of the worst target.

you were being callously dismissive of the working conditions in bangladesh to score points against american unions. charles: don't think the people in bangladesh don't need those jobs as well. we like to victimize everyone in this country when it comes to motivation which is being assaulted. >> you're first argument seems to be they died in a fire but they had jobs. stuart: it is funny but they chalked it up and you weren't talking in that frame of reference at all. charles: i started off ironically comparing this to the triangle -- factory fire in 1911 and gave the unions props because we did need unions and better conditions but i also said because unions did the thing on black friday and it was terribly unsuccessful and heard walmart the bottom line is wal-mart does hire people and

create jobs and the progressive movement if you remember fdr said there are four freedoms which have, what is freedom from want like we should never want anything. the government should provide it all. are round of world that ha was

context and the ray lahood contract the callous like no unions and walmart. charles: people were happy to perish in a fire -- people were happy to get out of work. you should be happy not to get up and go to work, that somehow being an american, you shouldn't have to go to work or count on slave wages. the nobel prize went once to the guy who started the micro loans in bangladesh. we are talking about $500 loans. that is the first step towards capitalism and yet a greater step towards capitalism, great points against unions and they're defending unions. charles: can't we agree it was funny? they were nasty to you. charles: the part i don't like is the e-mails and stuff on none of it is smart. it is all insulting. stuart: here comes the highlight reel.

it is next.

>> here it is, the highlight reel. roll it, please. >> they're pretty steamed about the idea you tax the rich and the middle class will feel better. >> this is worse than the mitt romney 47% comment. >> it would have a good aspects to the morale. warren buffett is at it again. >> when is he the of the rich in this country? >> it won't help the economy, won't reduce the deficit but will make us all middle class feel better. >> we went through warren buffett. >> it has been a fun show. >> thank you very much indeed. it is yours. connell: good morning, everyone. dagen: